Case Number: 150019

Whether Revenue was justified in refusing access to certain records concerning a review and/or investigation into the tax affairs of the applicant's company and related matters

Conducted in accordance with section 34(2) of the FOI Act, by Stephen Rafferty, Senior Investigator, who is authorised by the Information Commissioner to conduct this review

Background

On 16 September 2014, the applicant, a secretary of a specified company, made a request for all documentation relating to a review and/or investigation carried out by Revenue into the tax affairs of the company, in particular in relation to VAT and excise duty on transactions with other named companies. The applicant also sought records relating to the forming of various views and the raising of various Notices of Assessments by Revenue in relation to the applicant's company and records relating to an investigation by Revenue into suppliers of the applicant's company.

On 17 November 2014, Revenue issued a decision identifying 91 records relating to the request. It released 56 records in full, and 9 in part, with redactions under sections 21(1)(a) and 28(1) of the FOI Act. It withheld the remaining 26 records, relying on sections 21(1)(a), 22(1)(a) and 28(1) of the Act for its refusal. Revenue also relied on various sections of the FOI Act in refusing to confirm or deny that it held records relating to the final part of the applicant's request, relating to the company's suppliers.

On 1 December 2014, the applicant sought an internal review of Revenue's decision. She did not contest Revenue's decision to refuse to confirm or deny whether any records existed relating to an investigation into the suppliers of the applicant's company. Revenue's internal review decision of 23 December 2014 varied the original decision and granted partial access to one additional record that had originally been refused. It upheld the remainder of the initial decision. On 19 January 2015, the applicant sought a review by this Office of Revenue's internal review decision.

During the course of the review, the company's solicitors made a submission following an invitation to the applicant to make a submission on the matter. All references to the "applicant" in this decision may be read as references to the applicant, the company, or its legal representatives, as appropriate.

In carrying out my review, I have had regard to correspondence between Revenue and the applicant as set out above, to the records at issue, copies of which were sent to this Office for the purposes of the review, to details of various contacts between this Office and Revenue and to details of various contacts between this Office and the applicant. In referring to the records at issue in this case, I have adopted the numbering system used by Revenue in the schedules it prepared when processing the FOI request. Many of the records comprise more than one page, each of which has been given a related number by Revenue. For example, Record 28 which has been withheld in full comprises five pages numbered 28, 28.1, 28.2, 28.3, and 28.4.

In the interests of clarity, I should point out that this review was carried out under the provisions of the FOI Acts 1997-2003, notwithstanding the fact that the FOI Act 2014 has now been enacted. The transitional provisions in section 55 of the 2014 Act provide that any action commenced under the 1997 Act but not completed before the commencement of the 2014 Act shall continue to be performed and shall be completed as if the 1997 Act had not been repealed.

Scope of the Review

As noted above, Revenue refused to confirm or deny the existence of records relating to an investigation into the suppliers of the company. As also stated above, the applicant did not contest this at internal review or in her application to the Commissioner. Accordingly, this issue will not be considered as part of this review.

Furthermore, Revenue decided to grant partial access to two additional records during the course of the review, i.e. records 31 and 32. These records were sent to the applicant on 16 April 2015.

Therefore, the scope of this review is confined to whether or not Revenue was justified in refusing access, in full or in part, to the following records on the basis that they are exempt from release under various provisions of the FOI Act:

• Records withheld in full: 25, 26, 28, 29, 30, 33, 42, 43, 45, 46, 47, 48, 49, 50, 52, 68, 69, 70, 71, 72, 74, 75 and 79
• Records released in part: 31, 32, 53, 56, 58, 73, 76, 78, 80, 81, 82 and 83
  

Preliminary Matters

Before setting out my findings, I would like to make a number of preliminary points. Firstly, while I am required by section 34(10) of the FOI Act to give reasons for my decisions, this is subject to the requirement of section 43(3) that I take all reasonable precautions to prevent disclosure of information contained in an exempt record. This constraint means that, in the present case, the extent of the reasons that I can give is limited.

Secondly, section 34(12)(b) provides that a decision to refuse to grant a request shall be presumed not to have been justified unless the body satisfies this Office that its decision was justified. This places the onus on Revenue of satisfying me that its decision to refuse to grant full access to the records was justified.

Thirdly, I wish to explain this Office's approach to the granting of access to parts of records. Section 2 of the FOI Act defines "record" as including "anything that is a part or a copy" of a record. Section 13 of the FOI Act provides for the deletion of exempt information and the granting of access to a copy of a record with such exempt information removed. This should be done where it is practicable to do so and where the copy of the record thus created would not be misleading. However, I take the view that neither the definition of a record nor the provisions of section 13 envisage or require the extracting of particular sentences or occasional paragraphs from records for the purpose of granting access to those particular sentences or paragraphs. Generally speaking, therefore, I am not in favour of the cutting or "dissecting" of records to such an extent.

Finally, It is also relevant to note that a review under section 34 of the FOI Act is de novo which means that it is based on the circumstances and the law at the time of the review.

Analysis and Findings

Relevant exemptions
There are, in total, 35 records withheld in this case, in full or in part, and in its internal review decision Revenue refused access to the records under sections 21(1)(a), 22(1)(a) and 28(1) of the FOI Act. In submissions to this Office, Revenue also relied on sections 20(1), 23(1)(a)(viii), 26(1)(a), 26(1)(b) and 32(1) of the Act. It has sought to rely on more than one of these exemptions in relation to some of the records concerned.

Section 20
In submissions to this Office Revenue claimed that Records 31, 32, 33.2, 50 and 52 were exempt from release under section 20(1) of the FOI Act. For section 20(1) to apply, the record must contain matter relating to the deliberative process of a public body.

Section 20(2) provides that section 20(1) does not apply in certain circumstances. For example, section 20(2)(b) provides that section 20(1) does not apply to a record insofar as it contains factual information. Section 20(1) is also subject to a public interest balancing test as set out in section 20(3). That section provides that section 20(1) does not apply where the body considers that the public interest would, on balance, be better served by granting than by refusing the request. In considering the public interest test, it is necessary to have regard to the contents of the record at issue.

A deliberative process may be described as a thinking process which informs decision making in FOI bodies. It involves the gathering of information from a variety of sources and weighing or considering carefully all of the information and facts obtained with a view to making a decision or reflecting upon the reasons for or against a particular choice. Thus, it involves the consideration of various matters with a view to making a decision on a particular matter. It would, for example, include some weighing up or evaluation of competing options or the consideration of proposals or courses of action.

Having considered the records at issue, I do not accept that records 50 and 52 contain matter relating to Revenue's deliberative processes. I am, however, prepared to accept that the redacted information in records 31, 32 and 33.2 relates to a deliberative process. This is not the end of the matter, however, as section 20(3) requires a consideration of whether the public interest would, on balance, be better served by granting than by refusing access to the information.

Section 20 is concerned with ensuring that the right of access does not prejudice the deliberations of public bodies. Such prejudice might arise, for example, if the body was to disclose details of its deliberations before they had concluded. In this case, Revenue has since taken a decision on a course of action in relation to the information contained in the record. As such, it is not clear to me that the public interest would be better served by refusing access to the information. Accordingly, I find that section 20(1) does not apply.

Section 21(1)(a)
Section 21(1)(a) provides that a public body may refuse access to a record if it considers that access could reasonably be expected to prejudice the effectiveness of tests, examinations, investigations, inquiries or audits conducted by or on behalf of a public body or the procedures or methods employed for the conduct thereof. Section 21(1) is subject to a public interest test under section 21(2).

Revenue initially sought to withhold the following records under section 21(1)(a) of the FOI Act: 25, 26, 28, 29, 30, 33.2, 50, 52, 68, 69, 70, 71, 72 and 75 in full and 31, 32, 45, 47, 48, 49, 53.1-53.3, 56.10 and 56.13 in part.

In arriving at a decision to claim a section 21 exemption, a decision maker must identify the potential harm to the functions covered by the exemption that might arise from disclosure and, having identified that harm, consider the reasonableness of any expectation that the harm will occur. The test of whether the expectation is reasonable is not concerned with the question of probabilities or possibilities. It is concerned simply with whether or not the decision maker's expectation is reasonable. However, to satisfy the Commissioner of the reasonableness of the decision, it is essential that the decision maker explain how and why he or she believes release of these particular records will give rise to the harm envisaged. It is important to note that in the High Court case of Westwood Club v The Information Commissioner & anor [2014] IEHC 375, Cross J. held that a public body must do more than repeat the requirements of the exemption.

Revenue has made a number of arguments as to why it considers section 21(1)(a) to apply. Its primary concern appears to relate to the fact that the disclosure of the records would reveal Revenue's internal processes and methodologies which could prejudice the effectiveness of investigations and audits generally and other ongoing investigations and audits. It seems to me that Revenue's argument is that by revealing its internal processes and methodologies, other taxpayers would be better placed to take evasive measures to limit the effectiveness of those processes and methodologies.

While Revenue has identified some of the processes and methodologies that would be disclosed by the release of the records at issue, it has not explained how the disclosure of those methods and processes would give rise to the harms identified. It has not explained, for example, how the release of the specific records might enable taxpayers to organise their affairs to avoid selection for audit or investigation or to reduce the effectiveness of the investigative and audit processes employed. Accordingly, I do not consider Revenue to have justified its decision to refuse to release the records listed above under section 21(1)(a). I find, therefore, that section 21(1)(a) does not apply.

Section 22(1)(a)
Section 22(1)(a) of the FOI Act provides for the withholding of a record where it would be exempt from production in proceedings in a court on the ground of legal professional privilege. I accept that legal professional privilege enables the client to maintain the confidentiality of two types of communication:

• confidential communications made between the client and his/her professional legal adviser for the purpose of obtaining and/or giving legal advice (advice privilege), and
• confidential communications made between the client and a professional legal adviser or the professional legal adviser and a third party or between the client and a third party, the dominant purpose of which is the preparation for contemplated/pending litigation (litigation privilege).

Unlike some other provisions of the Act, section 22(1)(a) does not provide for the setting aside of that exemption where to do so would serve the public interest.

The records withheld by Revenue under section 22(1)(a) are Records 42, 43, 45 and 46 (all withheld in full). In its submission to this Office, Revenue stated that records comprise legal communications between it and its legal adviser and concern the giving or receiving of legal advice. It has also stated that the records relate to a case before the Appeal Commissioners which I understand is scheduled to be heard in June 2016. It is accepted by this Office that, in applying the rule on legal professional privilege, litigation encompasses not only court proceedings but also proceedings before tribunals exercising judicial functions, such as the Appeal Commissioners.

Having carefully examined the records in question, I am satisfied that they consist of communications between Revenue and its own legal advisers and concern requests for or the giving/receiving of legal advice. I find, therefore, that records 42, 43, 45 and 46 are exempt from release under section 22(1)(a) of the FOI Act.

Section 23
Revenue stated that the release of Records 50 and 52 would reveal identifying details of Revenue staff carrying out surveillance, which could pose a threat to the safety of such officers. While it did not cite a specific provision of the FOI Act, section 23(1)(aa) of the Act provides for the refusal of a request where access to the record sought could reasonably be expected to endanger the life or safety of any person. Given that Revenue has made no effort to explain why the release of the identity of the staff member in question, a Revenue Customs Officer, could reasonably be expected give rise to the harm identified, and given the provisions of section 34(12)(b) which places the onus on Revenue of justifying its refusal, I find that it has not justified its refusal in this instance and that section 23(1)(aa) does not apply.

Record 52 contains what appears to be a personal mobile phone number. I find that such information is exempt from release under section 28(1) of the FOI Act, as it comprises the personal information of an individual other than the applicant as defined in section 2 of the Act. While the FOI Act provides for the release of personal information in certain circumstances, I do not consider any such circumstances to arise in this case. Neither do I consider that there is any public interest in granting access to such personal information that outweighs the public interest that the right of privacy of this individual should be upheld.

Revenue also argued that it is vital that its upcoming case before the Appeal Commissioners is not prejudiced. Although it did not cite the section in question, this appears to be a reference to section 23(1)(a)(iv) of the Act which provides for the exemption of records whose release could reasonably be expected to prejudice or impair the fairness of criminal proceedings in a court or of civil proceedings in a court or other tribunal. The Commissioner has accepted in previous cases that the Appeal Commissioners constitutes a court or tribunal as provided for in this section. However, this is also a discretionary exemption and Revenue has not relied on this section to withhold records in this instance. In any event, it did not explain how the release of any of the records could reasonably be expected to give rise to the harm identified. Accordingly, I find that section 23(1)(a)(iv) does not apply.

Section 23(1)(a)(viii)
Revenue sought to exempt Record 33 in part (pages 33 and 33.1) under section 23(1)(a)(viii) of the FOI Act. That section provides for the refusal of a request if the body considers that granting access to the record could reasonably be expected to prejudice or impair the security of any system of communications, whether internal or external, of the Garda Siochana, the Defence Forces, the Revenue Commissioners or a penal institution. Revenue stated that the record reveals details of Revenue's internal system for deciding when and in what circumstances its officials are granted authorisations. This does not appear relevant to the application of Section 23(1)(a)(viii). The record in question relates to the delegation of powers to Revenue officials under the Finance Act 2001, and in my view does not relate to any system of communications. I note that Ms Murdiff informed Revenue of my view but it chose not to address that in its submissions to this Office. Accordingly, I am not satisfied that revenue was justified in withhold the relevant parts of Record 33 under section 23(1)(a)(viii) of the Act.

Section 26(1)(a)
Revenue stated in submissions to this Office that the information in Records No. 25, 26, 28, 29 and 30 was provided by a third party in confidence to Revenue for the purposes of its review of the applicant's tax affairs. Section 26(1)(a) provides that, subject to the provisions of this section, a head shall refuse to grant a request if the record concerned contains information given to a public body in confidence and on the understanding that it would be treated by it as confidential (including such information as aforesaid that a person was required by law, or could have been required by the body pursuant to law, to give to the body) and, in the opinion of the head, its disclosure would be likely to prejudice the giving to the body of further similar information from the same person or other persons and it is of importance to the body that such further similar information as aforesaid should continue to be given to the body.

For section 26(1)(a) to apply it is necessary that four things be demonstrated as follows:

• that the information was given in confidence, and
• that the information was given on the understanding that it would be treated as confidential, and
• that the disclosure of the information would be likely to prejudice the giving to the body of further similar information from the same person or other persons in the future, and
• that it is of importance to the body that such further similar information should continue to be given to the body.

Having examined the records in question, I am satisfied that the information contained therein was submitted to Revenue in confidence, on the understanding that it would be treated as confidential. Revenue stated that it is critical to its operations that the type of information contained in the records at issue is provided to it, in order for it to carry out its investigation and enforcement activities. Revenue also stated that release would be likely to result in third parties refusing to provide such information in the future. Having reviewed the records at issue, I accept Revenue's arguments. I find that section 26(1)(a) of the FOI Act applies to these records.

Section 26(3) provides that section 26(1)(a) shall not apply where the body considers that the public interest would, on balance, be better served by granting than by refusing to grant a request. While there is a public interest in the enhancement of transparency and accountability of public bodies, this must be balanced against the need to ensure the continued flow of important information into Revenue in relation to its enforcement of the tax laws. In the circumstances of this particular case, I find that the public interest would, on balance, be better served by withholding the records at issue.

Section 26(1)(b)
Revenue relied upon a combination of the provisions of section 26(1)(b) and section 28(1) in deciding to refuse access to the following records: 47, 48, 49, 74, and 79, in full and 56, 58, 73, 76, 78, 80, 81, 82 and 83 in part. Revenue also sought to rely on the provisions of both section 26(1)(b) and section 32(1) in relation to its decision to withhold Records No. 68, 69, 70, 71, 72, 74 and 75 in full. However, I consider section 26(1)(b) to be of most relevance to these records.

Section 26(1)(b) is a mandatory exemption that applies where disclosure of the information concerned would constitute a breach of a duty of confidence provided for by a provision of an agreement or enactment, or otherwise by law.

In its submission to this Office, Revenue stated that there is an explicit confidentiality provision set down in section 851A of the Taxes Consolidation Act 1997 which requires Revenue to protect taxpayer information from release to third parties without the express consent of the taxpayer or as required by law. While I note the applicant's arguments that a number of the records at issue relate to the applicant's company or related companies, having carefully examined the records in question, I am of the view that Records 47, 48, 49, 74 and 79 and the relevant parts of Records 56, 58, 73, 76, 78, 80, 81, 82 and 83 contain confidential taxpayer information of third party companies/taxpayers other than the applicant's company.

Accordingly, I am satisfied that Revenue was justified in refusing to release the records listed above, in full or in part, under section 26(1)(b).

Revenue also argued that the release of the information in Records No. 68, 69, 70, 71, 72, 74 and 75 was prohibited by EU law. Although section 43(3) prevents me from providing further detail regarding the subject matter of the records, I am satisfied that Revenue has justified its refusal of the records concerned as release would constitute a breach of a duty of confidence provided for otherwise by law, and that section 26(1)(b) applies.

Section 26(1)(b) is not subject to the general public interest balancing test under section 26(3). However, it is established that the action for breach of confidence is itself subject to a public interest defence. This Office takes the view that the public interest grounds which may justify or excuse a breach of a duty of confidence are quite narrow and include, for example, the revelation of wrongdoing or danger to the public. In my view, no such public interest grounds arise in this case.

Decision

Having carried out a review under section 34(2) of the FOI Act, I hereby vary the decision of Revenue in this case. I direct the release of Records 31, 32, 33, 50 and 53.1-53.3 in full. I also direct the release of Record 52, subject to the redaction of the personal mobile phone number as set out above. I affirm Revenue's decision in relation to the reminder of the records at issue.

Right of Appeal

A party to a review, or any other person affected by a decision of the Information Commissioner following a review, may appeal to the High Court on a point of law arising from the decision. Such an appeal must be initiated not later than eight weeks from the date on which notice of the decision was given to the person bringing the appeal.

Stephen Rafferty
Senior Investigator